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Rights as a Co-Signer for Mortgage in Ontario

17 July 2012

Has someone asked you to co-sign a mortgage in Ontario for them? Are you worried about it, because you think that you’ll be taking on a lot of responsibility, with very little to gain? You might not be wrong. Being a co-signer is a big responsibility and if you’re not careful, it’s something that could cost you hundreds of thousands of dollars. But the chances are good that you already know what will be required of you should you co-sign a loan. If it’s defaulted on, you will be responsible for paying the loan. But what will your rights be?

Many people think that co-signers don’t have any rights at all, but that’s not actually true. People think this because they confuse the term “co-signer” with the term “guarantor.” A guarantor guarantees that the individual owning and living in the home will pay the mortgage. If that homeowner defaults on the mortgage, the guarantor will need to step up and pay the balance on the mortgage. However, a guarantor’s name is never on the title of the property and so, a guarantor really has no rights if they sign a mortgage. This is not the case with a co-signer.

When a co-signer signs a mortgage, they too are responsible for making the payments should the homeowner default on the loan. However unlike a guarantor, a co-signers name is on the title of the home. Because of this, they are a partial owner of the home and they will have just as much right to it as the person living in it. A co-signer must be far more involved in the mortgage application and approval process simply because there name will also be on the deed. They’ll need to fill out all of the required mortgage paperwork; and just like a guarantor, they’ll need to have a good credit score and employment history.

Want to help someone out with buying their home, but are unsure whether being a guarantor or a co-signer is right for you? Lots of people think that there is no benefit to being a guarantor; but depending on your situation there might be. Speak to a qualified Ottawa mortgage broker who can outline all of your options for you and that can help you decide what’s best for you – and the other homeowner.

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